Services will close over National Insurance rise, Mencap tells BBC

A leading charity that supports people with learning disabilities says it may be forced to stop running at least 60 of its services as a result of increasing National Insurance costs.

Mencap is one of a growing number of care organisations warning they will have to axe vital services because of the impact of the Budget.

Businesses – including charities – currently pay a rate of 13.8% National Insurance on employees’ earnings above £9,100 a year. But that will increase to 15% in April 2025, instead starting when wages reach £5,000.

Mencap says the rise will cost it £5.3m every year.

The government also announced an increase to the national minimum wage during the Budget – with hourly rates for over-21s set to go up to £12.21 an hour. That will cost the charity a further £6.7m, it says.

Combined with having to increase wages for other workers as a result of the minimum wage rise, the charity estimates the changes will cost up to £18m a year.

Local authorities, who pay for most social care for older and disabled people, say the rising costs for the sector are “insurmountable”.

The government says it is tackling the challenges facing adult social care, as well as providing it with extra money as part of £3.5bn in additional funding for councils in England next year.

Twenty-six people with a range of learning disabilities live at Churchfields, in Essex. It is one of 600 services run by Mencap across England, Wales and Northern Ireland.

While Churchfields is not under threat, contracts to provide other similar services could be ended, Mencap says.

Among the residents at Churchfields are Barry and Betty. Both use wheelchairs and need round-the-clock support. Betty can speak a few words, but Barry is non-verbal. He often relies on sign language and answering yes/no questions written for him on a white board to communicate.

But with both, their faces and reactions can tell their story more eloquently than words.

Their faces light up when they see each other. Betty lifts Barry’s hand to kiss it and they both smile and laugh. An engagement ring glimmers on Betty’s left hand – staff helped Barry propose to her.

Teeto Adegbenro, who is one of Barry’s care workers, is passionate about his work.

“The quality of life you give to these people is the experience they have in their life,” he says.

It takes 50 staff to support the people at Churchfields to live full lives. Mencap employs about 7,500 staff across all its services. Many care workers are on low pay.

October’s Budget increased the national minimum wage (NMW) – a move that was expected and welcomed by those running care services in a sector where it is hard to recruit.

However, care organisations say the changes to National Insurance contributions (NICs) will have a big impact – particularly on social care, where many people work part-time and were previously below the threshold to pay the tax.

Mencap says the NICs increase will add at least £615 to the annual costs of employing each of its staff members.

When that is combined with the rise in the minimum wage, the charity will have to find an extra £12m each year.

But if the charity increases everyone’s salary to maintain pay differences that reflect levels of experience and responsibility, then it says the annual additional costs could rise to £18m.

Mencap’s chief executive, Jon Sparkes, told the BBC it may have to stop running at least 60 services.

“They are services that provide basic daily social care, support for 200 people with a learning disability, and services that employ about 400 people,” he says. “Those are the services I’m worried about immediately.”

He warned: “It could be more.”

Local authorities pay the charity to support people with learning disabilities, so in practice it would be handing contracts back to councils.

Mr Sparkes says unless there is a substantial increase in fees they will have to tell councils “we can’t afford to run this service safely on the funding that we’re getting”.

Similar worries are widespread across adult social care services. A new report, commissioned by care associations and written by health and care analysts LaingBuisson, says 80-85% of social care in England is provided by small, local organisations, which have little financial resilience.

Dr Jane Townson, of the Homecare Association, representing providers who support people in their own homes, is worried there is a real risk of a “significant reduction in care and support services”.

She fears that will leave some people without essential services, and increase the pressure on families and the NHS.

“We are at a tipping point and need immediate government intervention,” she says.

Most social care in England is funded by councils. Care providers estimate that just to cover the increased costs of the national minimum wage and NICs fees for their services would need to increase by 9-10% next year.

But local authorities are also under huge financial pressure. Melanie Williams, president of the Association of Directors of Adult Social Services (ADASS), represents the people who run council social care.

She says local authorities are already struggling financially, facing inflationary costs and increasing demand from people who need more complex care.

“The costs are insurmountable,” she says. “Many of us have overspends in adult social services. It just feels that we’re in an impossible situation.”

ADASS calculates that an additional £1.8bn is needed for care services in England “just to stand still”.

The government says ensuring there is a stable economy is one of the foundations for it’s plan to “deliver stability, growth and investment for communities across the UK”.

It says it is tackling the challenges facing social care with a range of measures, including improving staff pay and increasing financial support for families with caring responsibilities, adding: “We are tackling the challenges facing adult social care and taking the first steps towards building a National Care Service.”

The spokesperson added: “We are giving local authorities an additional £3.5bn in 2025-26, including a £680m increase in the social care grant to support the sector.”